Ambev: A Strong Brewing Leader with a Generous Dividend Yield

Ambev is a leading alcoholic beverage company operating in LATAM, with popular brands like Corona, Stella Artois, and Budweiser. It has a strong beer portfolio globally. The company offers a generous dividend and is considered a healthy brewing leader.

Ambev SA (ABEV), a leading alcoholic beverage company operating in Latin America, reported its Q2 earnings on July 31, 2025. The company highlighted significant achievements in EBITDA growth, digital ecosystem expansion, and cost efficiency, despite facing challenges such as volume declines in the Brazil Beer segment and increased financial expenses.

Ambev reported a robust performance with a high single-digit organic EBITDA increase and a 110 basis point margin expansion. On a year-to-date basis, the company achieved double-digit EBITDA growth with a 160 basis point margin expansion, underscoring its strong financial health [1].

The company’s premium and super premium brands experienced low teens growth, expanding in 7 out of Ambev’s top 10 markets. This highlights the successful positioning of these brands in the market and their contribution to the company’s overall growth [1].

Ambev’s digital initiatives, particularly the Bees Marketplace and Zé Delivery, demonstrated impressive growth. Bees Marketplace achieved a GMV growth in the 90s, reaching an annualized BRL 7.4 billion, while Zé Delivery saw a 7% increase in GMV, driven by an 11% rise in average order value [1].

The company’s focus on cost efficiency led to savings of over BRL 500 million in the quarter, effectively offsetting non-commodity cost inflation. This achievement underscores Ambev’s ability to manage costs effectively in a challenging economic environment [1].

Ambev’s Board of Directors approved an intermediary dividend payout of BRL 2 billion, bringing the total declared dividends for the year to BRL 6 billion. This decision reflects the company’s strong financial position and commitment to returning value to shareholders [1].

Despite these achievements, the Brazil Beer segment faced a 9% volume decline, primarily due to unfavorable weather conditions. The Core segment also experienced a low teens decline in volumes, attributed to its higher sensitivity to industry performance and revenue management decisions [1].

Ambev reported an increase in financial expenses, driven by FX carry costs in Brazil, FX losses related to dollar purchases in Bolivia, and a noncash impact from the appreciation of the BRL. Cash flow from operating activities saw a 9.2% decline, reaching BRL 3 billion, reflecting volume dynamics and lower sales tax payables [1].

Looking ahead, Ambev’s leadership highlighted expectations for continued growth despite challenges. The company anticipates maintaining its strategic focus on premium brands and digital platforms, which have shown resilience and growth potential [1].

In summary, Ambev SA’s earnings call painted a picture of a company navigating challenges with strategic growth in premium segments and digital platforms. Despite volume declines in certain areas, the overall sentiment remains positive, driven by strong EBITDA growth and cost efficiency [1].

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/ABEV/pressreleases/33843314/ambev-sa-earnings-call-highlights-growth-amid-challenges/